Very disappointed

You are a coward. And now you think you’re an investment guru on the top of the world in a high rise tower… I say this. Enjoy the drop. You know it’s coming one day. Thing is, you lack the credentials and fortitude you claim to have. You are not a contrarian, you’re an opportunist. And no, I don’t think I’m hurting your feelings. Just calling you out as the sack of shit you are…

This, of course, is one of the side benefits of having a blog. Every eight or nine minutes some brave, anonymous hater lashes out. Over the last two days I have deleted more messages like the one above (they add nothing to our conversation) than in the entire last year. It’s so comforting to, you know, matter.

Hate’s a fairly predictable thing when I get too positive. In the last two days I wrote about raging bank profits (Scotia and BMO), aggressive REITs (H&R and Dundee) and rebounding US house prices. It’s obviously been too much to bear for the gang who comes yearning for collapse. That includes the precious metalheads, the god-and-guns rightists, the America-haters and those who want widespread social meltdown so they can afford a house in Kits or Leslieville.

They yearn for the good old days of February, 2009, when the world was teetering, and I was providing daily commentary on an unraveling capitalism. But, too bad for them, things have evolved massively. Sure, we’re in deep debt, Europe’s a mess, Canadian housing is at risk and a lot of unemployed 50-somethings will never work again, but the path ahead is starting to clear. Central banks will allow no sovereign defaults. No hyperinflation will destroy money. No chartered banks will topple. The US will slowly recover. Smart people will have financial assets which adhere to my divine trinity: balance, diversification and liquidity.

Here are a few more things to piss off the doomers. Bill from BC write me last night after reading my take on the nascent American real estate renaissance:

I hate to admit this but I tend toward the negative when looking at the big picture. I mean if I ran my finances like the powers that be I would be bankrupt with zero sympathy from anyone. But, when I read your post today about US real estate it made me curious enough to email a friend I have that left Vancouver last year to take a promotion in Phoenix, AZ. This guy is no dummy and I wondered if his promotion was well timed.

Here is his “man on the scene” response to my question on how is real estate doing in Phoenix.

“I have 10 houses I have bought in the last 12 months. Everyone at (his company will remain unnamed) is buying in the Phoenix area. Ex-pats living in Canada included. My houses returned 12% ROI cash on cash (rent). Add 17% appreciation to that and it is all sweet nectar. 52% of the homes sold in the last 12 months in Phoenix were to investors. People a lot smarter than me are buying in volume.”

It’s true. Phoenix house prices have been rising more than 1% a month, just like in Miami. And while buying and owning is hardly as simple as Bill’s buddy makes it sound, there’s a ton of evidence Canadian and US prices will be going in opposite directions. If American real estate does stabilize and slowly starts appreciating in most regions, those who bet against the country, hoarding rocks and ammo, will regret it.

As for the banks, they’ve just showered investors with a $563-million windfall. That’s how much will be shoveled into the pockets of bank shareholders through dividend increases announced in the last three days. That’s not all the dividends paid out – just the extra added this week

RBC has scored the biggest quarterly profit in the history of rapacious Canadian bankers, making $2.2 billion in just 90 days. TD raked in $1.7 billion (a record for it) while CIBC saw a big profit surge, to almost $900 million. Together the Big Six earned $8.2 billion in three months, and unleashed a storm of dividend increases. This has never happened before, so you can easily tell who’s profited from the country’s lusty obsession with real estate. Even if house prices tank and new mortgage lending dries up, most of this cash flow carries on. After all, there’s $1.2 trillion worth of home loans already in place, which will still be there even if condos crash and equity burns.

This is why it makes more sense to own the bank than owe it. And it’s sure wiser to collect 5% from stable bank preferred shares or 4% from bank stock, than keeping your ‘house money’ in a high-interest savings account paying 1.5%. Besides, interest is taxed at the highest rate, and dividends at the lowest. How hard is this to figure out?

Well, I must be off now. The Amazonian protection detail is ready to escort me safely out of the blog. I’ve added a few extra sinewy babes, er, warriors since hearing an ambush is highly likely. We expect to be pelted with Depends. And depreciating yellow rocks.

Firstly, US banks own an estimated 407,000 homes that are expected to be listed over the next few years; second, there are 3.25 million mortgages that are in the foreclosure process; then there is 25% of all homeowners who are negative in equity that are likely to sell if (ever) prices were to rise, and lastly, another wave of everything above is coming as corporations are slashing jobs ahead of the fiscal cliff.

One small year-on-year uptick and everybody is screaming recovery. Unbelievable.

#21Realtors , Bankers and Mortgage brokers in an all out PANIC! on 08.30.12 at 10:48 pm

Look at them post day and night on garths blog and most of those realtor cowards attack Garth with hateful words. Keep up the truth Garth and fellow blogger spread the word on the internet , talk to family and friends and get the turth out that the housing market in Canada is crashing and crashing hard right now. People are on the brink of going bankrupt and CHMC is trying to hold the flood gates from blowing wide open. They tried to do that in the US and it failed as it’s failing right now in Canada. It’s going to be a nasty crash realtors a nasty crash. Why else are you out of work realtors here?

Funny. You have the ability to forecast 100% accuracy of all your calls. When someone calls you on it you throw a tizzy, call them lyer, fail etc. Failing to admit your failings earns you less credibility.

• Thu Aug 30 2012
TORONTO – Canada’s biggest banks stunned the skeptics with a cumulative $7.8 billion of profit in the third quarter
Posted on 29 August 2012 | 18 Comments
“Canada Mortgage and Housing Corp. saw profits at its mortgage insurance business fall sharply in the second quarter largely due to a jump in losses from claims. The rise in claims losses suggests that an increasing number of borrowers whose mortgages were insured by CMHC have been unable to make their payments and have lost their homes. Mortgage insurance pays the bank back when a borrower defaults
Hm but the taxpayer keeps getting no raises and banking reform is still not a election issue Wake up people

Garth is the man! I love to see your continuously correct and well presented arguments attacked nightly by each village’s online idiot. Too funny.

Ottawa will be screwed by employer demographics on TOP of all else DND a huge employer in central Ottawa will move west to Kanata. RCMP to the south from the east. The listings from displaced civil servants will cause local drops as is. Gonna be epic…

Ever since that meeting RBC hosted with Home Capital Group, First National Financial, Equitable Group, Genworth Canada, Canada Guaranty, condo developers (Tridel), Tricon Capital and RealNet, they’ve all been pumping out optimistic reports stating the market will continue to rise.

You are a coward. And now you think you’re an investment guru on the top of the world in a high rise tower… I say this. Enjoy the drop. You know it’s coming one day. Thing is, you lack the credentials and fortitude you claim to have. You are not a contrarian, you’re an opportunist. And no, I don’t think I’m hurting your feelings. Just calling you out as the sack of shit you are…

=====================================
Sorry Garth didn’t mean to send that to you, it was meant for Smoking Man.

Ugh, massive banking profits. I’m starting to get really annoyed with these annually increasing monthly banking fees – the bank with the “biggest profit” have increased my fees by 50% in the last few years. Time to change banks.

Hey Garth, I’ve been doing some research about bank preferred shares and REITs…and I’ve seen suggestions that there may be more risk in them than you’ve been suggesting.

Preferred bank shares in particular are compared with bonds, given their steady returns. However in a low interest environment the face value of the stock can be negatively impacted by a rise in interest rates…which you keep telling everyone have nowhere to go but up.

At least with bonds the payout on maturity doesn’t change, unless you’re dealing with junk.

And of course there are fears about REITs given the bubble you have so sagely predicted.

Given the inherent risks, what kind of % are you suggesting for a balanced portfolio in these vehicles? If REITs fall and bank preferreds share prices drop…is the decline going to be propped up by GICs.

I am not surprised you get rude messages every several minutes Garth. Just from my own personal experience, never mind the lunacy I see posted here on a regular basis. Congrats on being able to take it for what it is. Immature and foolish rubbish. I have found for myself the more ignorant someone is, the more angry they are with someone who disagrees with them. I thank you for your #1 pathetic blog Garth. It is a diamond in a sea of media rubbish!

Sad to see though, from so many comments day in and day out, many people miss one of the most important messages, in MO, and that is simply your simple formula for diversified investing. People who accuse you of disliking RE, or PM’s, or any other asset class, have simply not been paying attention to the weighting, and formula you use for all of the asset classes. It is foolproof….pun intended, foolproof…………discounting the possible occurrence of a nuclear holocaust. Thanks again Garth……love reading your blog, and it has been a good source of sound advice for me and I really appreciate it!

“This is why it makes more sense to own the bank than owe it. And it’s sure wiser to collect 5% from stable bank preferred shares or 4% from bank stock, than keeping your ‘house money’ in a high-interest savings account paying 1.5%. Besides, interest is taxed at the highest rate, and dividends at the lowest. How hard is this to figure out?”
——-

Your positive spin on the “Great Ponzi” is barely arguable, but does have a pulse. The bigger and more pressing question is…why would it matter?

If you think there is some inherent “protection” in avoiding the pitfalls you’ve outlined, all that disappears in the emerging Canadian social context.

Just as you feel that somehow the necessary 28 trillion deleveraging required over the next four years can just “happen”, you also feel that the social costs of that very same ponzi can also be “absorbed”.

Naturally, neither of these assumptions can or will be explored in any kind of meaningfull way. I mean how could they be? Your argument could not exist together with a serious, detailed analysis of your assumptions.

Central banks “won’t allow”…are you kidding? What do you mean they “won’t allow”. So you really do think that the central banks are bosses of citizenry? That’s a boldfaced admission of discarding democracy. What has occurred on a massive scale is fraud. Outright fraud and an affront to democracy. That’s not rabble rousing. I also know that citizens themselves have not cared about democracy and given away responsibility. Central banks and the ecosystem simply moved in to where there was space. Spontaneously.

But still.

So spell it out. What authority has the central bank got in a situation where the central bank itself creates unprecedented chaos, social division and poverty in Canada? Perhaps you think this consequence will not happen… I also wish it wouldn’t. I really hope it doesn’t. But can a serious debate be about wishing and hoping?

So what’s up with this central bank authority. Is it moral? Legal? Common sense? For the good of “social order”? To protect the investments of those lucky enough to have gotten the right information?

I’m lost. Which of those is it? Your comment is outrageous when you chew it a bit. I don’t think you thought that one through. Consider what it means.

Sign of the times, Garth. It’s not just this blog – it’s everywhere. Very few things in life are worth getting into a vicious rage over, but you wouldn’t know that if you watched mainstream TV. Every trivial occurance is a big deal. Worth having an argument over. I used to read the reader comments of CNN news stories. Perhaps some insight from someone, maybe another intelligent perspective. Forget it. Miles of venom and stupidity designed to irritate. Same with Youtube where the younger cretins voice their “opinions” (ie this sux!). And also on Fox News etc etc. I don’t remember this constant anger dominating our lives when we were younger, but its all pervasive now.

Unfortunately the Internet has millions of anonymous idiots who can, now, get a platform and be heard.

I said it last night and said it again. What you are seeing in US real estate and their stock market is a suckers rally. Anyone left with capitol is in and they are depending on hopeless growth. When the fed disappoints tomorrow and the chain of events of a Chinese slowdown and Euro crisis intensifies you will see just what i am saying, the last year has been a suckers rally nothing more.

This is not doom, not gloom just reality that central banks do not have the ability to print anymore.

The stock market usually looks 6 to 8 months in the future. Bank profits from the past mean nothing. Canadian bank shares will tank big time in the future. Everyone except you seems to realize that. The Toronto Star even headlined this fact at the very top of the business section about 2 weeks ago. Once residential real estate drops the next shoe to drop is commercial real estate… your oh so precious Canadian REIT’s. Like i said only someone with a strong dislike for money would own Canadian REIT’s.

I don’t know who the mystery man is but I do know George Soros, if anyone is heard of him, just sold his financials holdings and bought into gold. What does that say when a man who’s connected to the White House and Wall Street makes a move like that?

You are a coward. And now you think you’re an investment guru on the top of the world in a high rise tower… I say this. Enjoy the drop. You know it’s coming one day. Thing is, you lack the credentials and fortitude you claim to have. You are not a contrarian, you’re an opportunist. And no, I don’t think I’m hurting your feelings. Just calling you out as the sack of shit you are…

Ain’t going to happen in the US. They’ve hollowed out their middle class by offshoring all the manufacturing and good paying jobs. Without the jobs, there is no one to buy houses except dumbass speculators who didn’t learn the first time

Look at realtor smokingman lash out on Garth and other bloggers. The housing crash in Toronto is starting to get to him . Many realtors like smokingman are in an all out panic as well as rbc and other mortgage lenders who see the writing on the wall.

–
“Every eight or nine minutes some brave, anonymous hater lashes out.” — Means people are reading, but whether they understand and absorb your message is another matter. Never mind. At least the audience is growing!

Most people would rather secure a primary residence to raise their family, pay down the mortgage a bit, then start building a portfolio. That’s never going to change.

The idea of not buying a primary residence, and instead, handing over a monthly stream of income to a financial services representative is rightly, or wrongly, found to be repugnant for a lot of people, mainly immigrants from other countries (i.e. a good chunk of the country) that have zero trust in the financial services industry in their home country.

There has been a pride of ownership since time immemorial. No amount of flogging bank preferred shares to renters will change that.

“Even if house prices tank and new mortgage lending dries up, most of this cash flow carries on. After all, there’s $1.2 trillion worth of home loans already in place, which will still be there even if condos crash and equity burns.”

Not only that, but the banks will be raking in late fees, payment modification fees, and all sorts of additional fees associated with families that are struggling. Even the bank’s legal department can be a profit center in the foreclosure process as hiring lawyers at $50/hour and billing at $200/hour can be a very profitable business.

Just seen that show hot properties and that real estate agent with the huge head says Toronto condos are going up another 5 % and october will be so robust in sales in Tornto so sorry all you doom and gloomers the party is still going up . So put that in pipe and suck it !!

How true your words are. I’m a bit of a ‘political junkie’ but totally refrain from commenting on MSM news sites & to some of the idiots who post of Garth’s blog. Life is too short. I’m in the Winter of my life.

Sure, we’re in deep debt,
Canadian housing is at risk
a lot of unemployed 50-somethings will never work again,
but the path ahead is starting to clear.
…………………………………………………………..
Well I am clearly on another planet as I was under the impression these were very very serious problems. I guess I am far to pedestrian for the new multiples…

Baby boomers and immigrants will save us. But crunching the numbers for seniors, most times it’s better to stay in their homes, hire out gardening work, then it would be to buy a condo. Many balk at renting, sadly.

There was a summer Toronto social for the well heeled last month. Raise awareness for people to grow their own urban food. Looking at the attendees was hilarious. Developers pretending to show interest in soil and harvesting just so they could take their wives downtown in their Maseratis. All this while, their excavation company is ripping through farmland to build town homes while their lawyers choke hold local councils to build on the green belt.

TIFF starts soon. Will we have another round of glass balcony explosions with Brad and Angie ducking under reinforced netting draping million dollar condos.

A northern GTA city council was driven around in a bus to tour different mixed use developments in Mississauga and Toronto, all to inspire them when developers show up. The only problem being that the council’s lands are so far north, difficult to think that 20+story condos with retail podiums will be an easy sale. Especially when it takes a road trip worthy of an expedition to the pole to civilization on a blustery February day. Many people don’t want to be staring at a cow/pig farm from their slick 500 sqft $400k condo, in the flatlands.

The pyramid scheme has to end. The words ‘sustainable growth’ have no meaning.

In fact, Canadian banks have the great advantage of being seriously profitable. And they can sock away those profits as Tier 1 capital. The banks will be fine.

Gold is setting up for a bit of a run. Not to 10K or anything dumb; rather to 2-3K over the next year. Why? Because central banks are buying.

As for houses: here the Dog Walk Index has For Sale signs and price reductions. The 2.35m house down the street is now 1.95m and no showings. Reality is beginning to bite. When the September turnover occurs my bet is that the Victoria market will be down 2-5% year over year. (This might be upset with a couple of 3m plus sales, but I’d be surprised.)

A lot of houses are being priced well below 800K which, last year, was the shack price in Oak Bay. And a lot of houses, having had their turn on the dying market are off the market. Some are vacant.

Hoping into the US market is both a no brainer and quite tough. Assorted tax law considerations and the difficulty of renting to good people at long distance makes this more difficult than the straight numbers suggest.

First of all, I would like to say the hateful comment on your address only proves that he is envy of you. There is nothing wrong about anonymous haters like this, unless they start threaten you or your family (or your blog).

I have recently read an optimistic post about Canada’s Strong Housing Finance System. I would like to know your opinion on this article. Is it a government and RE propaganda or do you agree with some of its parts?

I would love to read more of your thoughts about possible government regulation in the future. Are you going to publish something like that?

Garth,
Respect is given for your fight and standing up for what the way you see things. You have a great dog in this fight and I respect it whole heatedly.
Quick question from a broke student: If prices are decided in the market place, and there are people willing and able(with means/ foreign investment) to pay them, how will this bring the fall in real RE you predict?
I agree, Joe shmuck can’t afford or would be risking greatly putting all eggs in a 700 sq. foot condo for 300+k.
Just could use some further clarity.

Bingo you nailed it!…There is still a tremendous amount of shadow inventory plus the U.S. economy has just entered a new recession [around June] that will be MILD with a duration of 18-24 months.

U.S. consumers are cutting back creating an inventory led recession. Again this will be a MILD recession not the 2008-2009 version.

My only disagreement with Garth is that on a total U.S. basis RE has only declined 3/4 of the way to the bottom. Where I do agree completely is selling way over valued Canadian property. The sell side of the equation is far more important than the buy side of American RE.

I will say this, for an investor who has a 15 year plus time horizon and goes to the American cities that have been nuked, your purchase should do fine. Close enough as they say.

I agree with you about the hate mail. I guess some people can’t simply agree to disagree and leave it at that.

Buying up houses in Phoenix ? Is that guy kidding or what ? He makes it sound like buying and selling or renting houses is as simple as trading baseball cards. What about all of the renters who don’t pay their rent ? What about having to fix whatever’s broken ? What about renters who destroy your property by doing stupidly irresponsible things ? Sure, while the place is in good shape the money rolls in and you think renting is the only business to be in but once a tenant takes you to court because you neglected to take care of the rat infestation, well that’s when the “you know what” hits the fan. When you rent property you take on all of the risks of ownership and you hand over control of said property to your renter. You also take on the risk of payment default and as costs increase, you may or may not be able to pass this on and recoup the loss, depending on the rental laws in that jurisdiction.

Owning real estate is very complicated and owning rental real estate or even non rental real estate in certain jurisdictions can be incredibly complicated. It is not for the faint of heart and you really have to know what the heck you are doing. It is definitely not as simple as hopping on a plane to Phoenix with your credit card in tow and if anyone thinks it is, I have some swamp land in Florida that they can have for a very good price.

Of course if you are extremely fortunate and have a pile of money to invest, you can always hire people to take care of everything. However, this costs money and I am quite sure that only certain types of rentals end up being profitable to the point of being worth it, after you factor in ALL costs (.. taxes, insurance, upkeep etc..). Like that Scotiabank building, for example … with floor upon floor of commercial tenants. Or a successful, well positioned mall perhaps. Stuff like that.

Renting out apartments and houses is definitely not an easy ride. Personally I would rather invest money in something more liquid than take on a risk like that. No matter how good the market is.

Now buying and then mortgaging a place out to someone might be a better idea. The person or persons living on the property take on all of the costs and responsibilities of ownership ( .. again, taxes, insurance, upkeep etc..) but they pay you a sort of a “rent to own” payment every month for a very long period of time (20 – 25 years). Not only that, you are totally protected from interest rate risk because every 4 – 7 years, the “tenant” has to renegotiate their loan payment as rates change over time. Your “renter” can sometimes even get someone to guarantee the loan so that you don’t even have to worry about risk of payment default. Now how sweet is that ?!

Anyone with that kind of an investment has really got it made. Virtually no risk, practically no costs (just administrative) and a guaranteed return over a long period of time … hmmm …. what were you saying about banks reaping in great profits, Garth ? I wonder why that is ?

1. A situation presents itself over and over for many years, and we are “unaware” of it ( character defect).

2. Almost everyone is “doing it” ( whatever the reaction is to the situation…and it’s definable quality of not facing that situation because it’s perceived as both impossible to face and/or too costly.

3. The situation becomes multi-faceted and entrenched. It’s used to support a false self, which lives together with the real self.

4. Crooked living leads to painful consequences which are both “invisible” ( but in plain sight and now percieved as top priority to ignore).

5. Crisis happens and it’s all out in the open.

6. It’s ignored and psuedo-solutions are provided, who’s top qualities are attractiveness to many. Why? They don’t involve addressing consequences and set out to suggest consequences from the original ( and now much bigger) problem.

7. Supreme irony starts to emerge ( like being in an international ponzi scheme headquarters and calling it “Canadian”). Tons of irony emerges. Dots aren’t connected.

1-7 continue gathering steam. Sometimes the recovery of self and right action don’t happen as the “life-avoiding” 1-7 go on to death. Since the strategy belongs to and fits into a group, it continues…evolving along the way. In families, communities and humanity itself.

To me this is all opportunity. True social science. Anthropolgy at it’s best. What we’re here for and what we’re equipped to deal with. The individual has a lot of real power ( access to humility and service).

The machinations of denial don’t change that. For me, moving around Goldman Sachs et al “house money” is a distraction and one more place 1-7 operates.

It’s like giving a 3 year old a paint brush and a couple of ounces of water to “help you” paint the livingroom.

The sack of shit comment? No way. That would mean everyone is a sack of shit.

This real estate bubble is a mirror of Canadian life. And who wants to really look. Only those who have to. The deepest doo-doo is reserved for the “casino winners” who collect at the one arm bandit with the flashing 1980’s siren installed at 4:30am one Sunday night by a lonely worker with tools spread out on the floor.

On Friday night you cash in big…and invest back into the casino.

Problem is, what the hell are you doing in a casino. At least the guy who lost all his money already is in the street with options.

Garth – You’re too early with your predictions. Whenever you think something is going to happen, wait a couple of years to make a blog about it. Are you going to start a blog now for US housing as an investment? You might as well get HGTV as your sponsors. Let’s mock the materialistic people who think granite countertops and stainless steel are gold. When I read a post about that, you had me hooked here.

United States still has a shadow inventory to deal with before prices start to “skyrocket”. Is buying a house a good investment anyhow? Why pay property taxes, transaction fees, the list is never-ending? It’s a waste of money and a waste of time. Stick to your original idea that Canada will see price drops and a diversified portfolio. Canada will see housing price drops in the short-term. No housing recovery in the short-term for the US.

BTW, I don’t blame you for predicting the drop in 2007 in Canada. Without government stimulus, it would’ve happened.

@ #51 Investx on 08.31.12 at 12:26 am
18 Investx on 08.30.12 at 10:43 pm
When dividend hikes are announced do they apply to both common stock and preferreds?
Did these recent hikes for the banks apply to both?

They are, but typically only when the company announces the offering (i.e. with the prospectus) and when they hit the market. After that, since most Preferreds have a fixed dividend, there won’t be too many headlines. You can find all details of the Preferreds on each company’s website.

Heard you got let go from the sales centre at the development site in Uxbridge. Selling those $1mil golf course McMansions was a tough grind. What with neighboring whole plots of farmland selling for less than one 60ft/200ft subdivision home.

Not to mention the 3 partners developing the site. Huey, Louey, Dewey. With Huey being the mean SOB who likes to scream obscenities at trades. Louey, his brother, who bows his head and takes his aggression out on his Porsche..And Dewey who is a hot mess of babes, divorce, cars and coke.

Giorgio, you shouldn’t be at home at 4pm weekdays watching CityTV real estate show….you need a job, man.
That’s why your fantastic lovely wife gave you the boot.

Garth, just admit you’ve got it wrong about the U.S. economy and your hate mail probably stops overnight.

The U.S.A is simply Japan version 2.0. No amount of stimulus will get her back to former glory and then the servicing of that stimulus swamps the greater economy. Its just that simple. U.S.A heading to 20 trillion debt and 100 trillion unfunded liabilities. There is no coming back from this. If they took every persons entire wealth plus all corporations profits they couldn’t pay that sucker.
Who cares? Canada will never retire its debt, either. Most people can’t pay off their mortgages. But they can service them. Same with sovereign debt. This is hard to understand? — Garth

Garth, that quote you start your article with today is quite accurate imo.
If you are a contrarian you cannot seriously claim that:
“… Central banks will allow no sovereign defaults. No hyperinflation will destroy money. No chartered banks will topple. The US will slowly recover. ”
You are a status quo guy, consult Obama about recovery.
My statement is correct. Deal with it. — Garth

Both, Real estate is toxic, stay away for a couple of years.
Precious metals have 3 to 5 years of there bull run left in them.
Don’t be stupid and buy property, don’t be greedy and go all in on pm’s or stay too long.
There will be a time again to buy property and not have pm’s, that time is not now.

I’m missing enough wealth/energy/time to buy a US property but instead, being a discount brokerage cowboy , went with ticker ARCT on the Nasdaq. The 6.3% yield was irresistible but much to my surprise it’s come with a capital gain too! Garth, what can I do to get some hate mail?

#64 Mr Buyer: “Sure, we’re in deep debt, Canadian housing is at risk a lot of unemployed 50-somethings will never work again, but the path ahead is starting to clear.”
…………………………………………………………..
“Well I am clearly on another planet as I was under the impression these were very very serious problems. I guess I am far to pedestrian for the new multiples…”

************************

I think Garth means the large corporations are revamping their operations and the banks are making huge profits….so they are just fine. The citizenry, however, is not.

Re: Buy land in AZ instead of rental property, it’s easier to look after. I bought a residential lot close to Casa Grande, AZ for $3,000 several years ago. I still haven’t seen it. Taxes are $75/year. CG is an Ag/tourist area, anyone familiar it? The lot is close to the Francisco Hotel & Golf Course. It’s true, sand is easy to look after.

Hate is good Garth! Hatred of evil doers is even better.
Did you really believe that people would be universally perverse enough to be politically correct and agree with the ideas and policies of the governments, secret societies, banks , realtors and other elite special interests? Garth your world of finance, government and political correctness is just a failure and a crime in progress and good people like myself can do quite nicely with out it.

…Unfortunately the Internet has millions of anonymous idiots who can, now, get a platform and be heard.

Don’t give up – you’re doing good work…
_____

I totally agree. The internet can be a very angry place full of people trolling and hijacking discussions. Even on this blog there are a couple of posters that I just skip over because I know there will be nothing relevant or worthwhile added to the discussion. Kind of sad that we all can’t be respectful of one another in our disagreements.

“Bingo you nailed it!…There is still a tremendous amount of shadow inventory plus the U.S. economy has just entered a new recession [around June] that will be MILD with a duration of 18-24 months.”
________________

Shadow inventory.
From looking at the bank’s balance sheets, both US and Canada, I can’t find where this shadow inventory is recorded. Can you guys help me?

Garth, you know as a sea-soned pollacktician and blogster that people will tell you clam up shrimp and stop being so shellfish when the “loyal” followers stop hearing what they want to hear. Seems to me you have two types of blogdogs, the rich who want to get richer looking for advice, and the poor who hope everyone else will get poorer like them. While the doomer scenario really appeals on so many levels, I’m too cynical to believe that the rich will let it happen, at least not to them.

I’ve only been a loyal blogbitch for a few months, but it seems to me your message has been very consistent; you just focus on different aspects of it and often in response to what people are asking you to talk about.

In the end it’s really quite simple isn’t it: buy low, sell high, get the best ROI. And… avoid high leveraged risk by living within your means and diversifying. End of.

Re. Phoenix… As much as I love AZ for vacation and possible retirement, it makes you wonder. When common people jump in to buy speculative RE, is it R-E-A-L-L-Y the bottom? Maybe a lot of money can be made short term, *IF* they have a speculator mindset and perfect timing. Say a year, 18 months maybe. But buy and hold for the long term? I was just reading a book about climate change and Phoenix will be ground zero. American southwest will be burnt toast (pun intended) in the long run, due to a five-letter word. Water, or more accurately the lack thereof. I wouldn’t buy RE in Phoenix expecting prices to be way higher ten years from now!

@ 17 Canadian Watchdog

Add to that the wrinkly boomers (Garth’s moniker) that will put their houses on the market all over North America in the coming years, and I cannot see any sustained U.S. RE recovery even without any “black swan” event on the horizon. Looks like there could be some cheap RE in the burbs of New Orleans.

Anonymous loser wrote to Garth and said, “You are a coward. And now you think you’re an investment guru on the top of the world in a high rise tower.”

Well, to the anonymous coward who wrote those words in quotes above, know one thing. Garth is the all knowing, all wise, bearded mystic oracle, financial prognosticator without equal, denouncer of parliamentarian peckerheads and peckerettes, former minister OF NATIONAL REVENUES, NYT best selling author, Harley riding, Amazon bathed and protected, lone voice of financial reason in the HELOC infested wasteland of Canada. What are your credentials o anonymous loser?

#57 Michael F on 08.31.12 at 1:00 am wrote:I want to buy a house in Canada but my financial advisor recommended I convert to Islam, marry 10 women and send them all out to work. That should pay the mortgage.

Better go Mormon fundamentalist then. Islam only allows you 4 wives tops. And even then you have to prove that you can keep them in style.

I read your blog along with many others and appreciate your insights. I think you are being very naive however.

Anyone who pays attention to the real goings on has hopefully gotten to the Rothchild/Rockefellar banking oil cartel. This is horrific and scary enough to make most people stop looking or begin heavy denial. Wrong course of action. You need to ask ‘who is pulling their strings?’ and the answer reveals itself.

The head of the World bank gave a speech that has hit YouTube in which he forecasts (read: admits it’s part of the script) that we are in the middle of a monumental shift in wealth, from the west to the east.

The banker details this through his own life experience. Rich countries, in the year 2000, held approx 80% of the worlds wealth with 1 billion of the population and poor countries held 20% of the wealth with 5 billion of the population.

Get ready for a new world in which that ratio is 35 – 65.

China is taking over. They are cash heavy and used the Rothchild/Rockefellar banking/oil cartel to bankrupt the wests valueable assets. This is complete.

China’s secret financial wealth can be traced back to the days of merchants and spices and perfumes and opium dens. The Chinese only accepted gold as payment.

What the elites are best at is mis-direction. We have been watching Alex Jones et all, looking the wrong way, the whole time.

What you achieve if you are China is Order of of Chaos, induce the chaos to create the order. Happens all the time.

Waterloo
Great Depression
9/11 etc etc

so….there’s that.

Remember the truth comes to you in 3 stages.
Violently denied
Ridiculed to death
Accepted as self evident

Manufacturing is gone to China and India and other developing parts of the rest of the world and that was our advantage all these years.

There is more to the story, something very Draconian, but that’s all I can add. Think military. NATO. Who is China allied with?

Two questions from a novice: how did we manage to have a decade of hyper-inflated house prices… Almost always the largest purchase in ones life… And yet our inflation rate was stuck in the 2% neighbourhood? I could afford a condo in Vancouver in 2002, and even though my salary has actually gone up with inflation, I do not have a hope now… Due to inflation, but it’s not reflected in any official stat.

Second question: on the surface, you advise against buying a home because prices have never been higher and must come down, but you say invest in banks because profits have never been higher, and must go higher! Can you explain the difference?

Misleading post, most people will never have a chance to secure full time employment in Phoenix in order to monitor ten rental houses. Besides who wants to live there 12 months a year with dust storms, floods in Scottsdale and 45 degree heat that can peel your skin off the car seat.

Those depreciating yellow rocks are up $30 off the low this morning as Bernanke opens the door to QE3 to infinity. Few are saying gold is the only investment to be in, it’s one of several sectors you can own in a balanced portfolio.

84 T.O. Bubble Boy on 08.31.12 at 8:25 am
————————————————–
Why aren’t preferred dividends ever announced in the media?
—————————
They are, but typically only when the company announces the offering (i.e. with the prospectus) and when they hit the market. After that, since most Preferreds have a fixed dividend, there won’t be too many headlines. You can find all details of the Preferreds on each company’s website.
————————————————-

Thanks for the response, TOBB! I appreciate it.

So you cannot look forward to steadily increasing preferred dividends like you can with the common ones?

Sure banks are making record profits, but the idea is that they are covered against big losses if there is a big RE drop? We’re counting on Canadian’s not walking away from their houses, holding on with fingernails of steel and making payments? I’m not sure that is going to happen in Alberta, isn’t the concept here that RE is tied to the greater economy, and a big RE drop can potentially cause a spiral of reduced consumer spending, out of work Reno guys, realtors and home depot employees? Our dollar is then affected and then so is commodity prices, then the international oil and gas giants who own all of the canadian companies now, will pull their projects and move the money to the US and its all crap.

I don’t think the banks will collapse, like Spain, but won’t it be a similar situation?

Also with all the canadian investment in Phoenix, wouldn’t a bunch of people losing jobs in Canada make it unaffordable to continue making HELOC payements that paid for the phoenix houses?
What am I missing here? Giant bank profits only indicate how bad things could end up right? Sure the banks always win, and I wanna keep my job and who cares about a house, but I am not as hopeful as I used to be this is gonna happen.

… questions from a novice: how did we manage to have a decade of hyper-inflated house prices… Almost always the largest purchase in ones life… And yet our inflation rate was stuck in the 2% neighbourhood?
—————————————

Answer from a novice: Perhaps because the inflation rate is based upon the cost of goods and services citizens actually need to survive and not upon luxury items such as home ownership. The last time I checked, rents had kept pace with inflation.

I don’t know who the mystery man is but I do know George Soros, if anyone is heard of him, just sold his financials holdings and bought into gold. What does that say when a man who’s connected to the White House and Wall Street makes a move like that?

If you’re Soros you can afford to be wrong. Can you? — Garth
———————————————————-
So far after the results of the Jackson Hole meeting and gold’s blast off, I think Soros will be right again. In this business it’s not what you know but who you know.

#115 Dave – In regards to China why are there 64 million homes that are over priced which sit empty? They are called ghost cities, and there are shopping centers which are the biggest in the world with no customers walking around. Think about it!

#30 Baron Munchies… You’re welcome… I borrowed that from School of Rock with Jack Black, who by the way plays many characters in government also.
I see people referring to George W and Soros. Keep in mind that these are actors like Warren Buffett.
George W. is played by James Brolin.
Soros is played by David Rockefeller Sr…
We’re just waiting for confirmation on who Obama is…

I agree. The destruction of the middle class in Europe and America (coming soon to Canada and Australia) is the most important story of the current economic conditions. Good luck getting it told.

—————-

Right on! I remember many years ago—long before the current economic problems, I was reading something about feudal Europe. It said that there were a few super-rich, those that owned castles, and the rest were poor peasant surfs who farmed outside the castles. There was no middle class. Essentially zero! The article stated that starting with the Industrial Revolution, but especially since WW II, there was a large middle class that sprang up. This is a historical anomaly. The future trend would be to go back to the norm where there are a few supper rich and the rest poor. This has always stuck in my memory since I could see it coming. It has been only in the last four years or so that this trend towards the destruction of the middle class has accelerated in earnest with a massive transfer of wealth from the middle class to the ultra rich. Since the U.S. had the largest and wealthiest middle class in world history, the transfer of wealth is most obvious there. With the above in mind, it is easier to understand why Wall Street got bailed out with taxpayer money. When Joe Smow lost his house… well too bad!

Garth, there will always be people around that share a different view of the world than your own. I look on these encounters as possible learning experiences. They help me to open my eyes to understand what I do not know. The worst human fault I believe is thinking that you know it all or being closed minded in your beliefs. If you listen, you can learn. This blog for example has opened my eyes in a number of areas – housing values, REIT’s, the need for diversification etc.

Of course the second worst human fault is assuming that your version of the “facts” are the correct ones (usually comes from listening to hearsay without any attempt at actual research).

I just saw the latest stats on 50 USA states with ratings, and not to be confused with a home purchase to make a future flip, and make a killing. It covered a complete spectrum for quality of living, and was a bit surprised that only one got an ‘A'; it was Idaho.

Investx #120 – preferred shares generally have a fixed dividend entitlement. They are sort of like corporate debt in that regard and so they can move like a bond when interest rates move. Unlike a bond though, they have preferential income tax treatment which is important if you hold them outside of an RRSP. They do not share in dividend increases like common shares do but they are also much less likely to have their dividend cut either.

Preferred shares will also generally rank above the common shares (but not corporate debt) in the event of the company going bust.

I think of preferreds as “like” corporate debt but with advantageous Canadian tax treatment.

Investx #120 – one other thing, always read and understand the terms of any preferred share BEFORE you buy. Some shares can be called away or redeemed by the company and some can be converted into common. The share terms are available free on the companies website or else ask your advisor.

… questions from a novice: how did we manage to have a decade of hyper-inflated house prices… Almost always the largest purchase in ones life… And yet our inflation rate was stuck in the 2% neighbourhood?
—————————————

Answer from a novice: Perhaps because the inflation rate is based upon the cost of goods and services citizens actually need to survive and not upon luxury items such as home ownership. The last time I checked, rents had kept pace with inflation.

So simple, House prices are based on affordability, affordability is base on interest rates. Interest rates have been dropping for 20 years, house prices have been going up according for 20 years. These have been the boomer years where people like me had familys and bought houses, supply and demand, lots of demand, little supply, house prices go up. Add to this a mass change in culture where women entered the work force, (check our Elizabeth Warren) and you have the perfect storm.

To All Metalheads
Sean Boyd of Agnico-Eagle Mines calling for 3000 $ gold.
Based on geo- political sytuation and lower gold production.
Isn’t he conservative.
That sucker who bought silver at 43 $ is down 11.70 $ now.
Will continue

A preferred share has no dividend entitlement from corporate profits, but rather a fixed coupon rate of return that acts very much like a bond instrument, and preferred shares are complex with many twists and turns, so each one must be looked at carefully, as not all are the same.

Blogger DR. HOUSING BUBBLE has been reliably following this battered market for years now.

His conclusion is that this is an artificial bounce (bubble?) in house prices and that it could be a head-fake amidst a still weak jobs market.

Here are his thoughts:

“…So how is it possible that home prices are rising so strongly in spite of weak income growth?

First, there is an unusual mix of buying going on. You first have investors competing for a lower amount of distressed inventory….

(in) PHOENIX 41 percent of buyers paid all cash last month. The vast majority are investors as noted by their absentee status.

Nationwide investor buying is a big segment of the market and with falling distressed inventory and people chasing yield, prices have been pushed up as many investors are likely opting to purchase non-distressed homes that carry a higher price tag.

The other segment is coming from the low down payment FHA first time buyers. Rates are at incredibly low levels…So even with stalled out incomes, many Americans found that they could afford more house with the same or even lower household income. With slim pickings for inventory, many bid prices…”

JOBS, STILL THE MAIN DRIVER OF ECONOMIC RECOVERY

Until then a new housing mini-bubble and a pumped up stock market, driven by QE dreams and computerized trading, will continue to give the impression of improved economic conditions.

WHAT COMES AFTER THE US ELECTIONS?

An American Empire sick with debt and an outrageous number of self-inflicted (costly) obligations, and not enough taxpayers to foot the bill, is what.

If fact half the adult population get tax refunds!

STRAIGHT SHOOTIN’!

Related to the sad state of the US, I thought Clint Eastwood’s ad lib one-act play to the Republican convention last night was an amazing event from one of Hollywood’s main players.

He was right on the money, breaking the “you can’t make fun of Mr. Obama firmament.”

You knew Eastwood got a bull’s-eye by the general panning, snivelling, response he received from the MSM after the fact.

Mr. Obama still hold’s god-like sway over those media-rotters and, therefore, Mr. Romney has a major uphill struggle ahead.

The voters have a helluva choice, they really do.

As Mr. Eastwood so adroitly put it, “…Something that I think is very important. It is that, you, we — we own this country. We — we own it. It is not you owning it, and not politicians owning it. Politicians are employees of ours..”

Damn shootin’ Cowboy. And sumpin’ better be done quick to rescue the outfit before the last stage pulls outta Dodge!

Dollars are private corporate products.
Ben, can I have some more?
Ben: Of course! (why would a business stop selling its product)
Central Banks originate from the communist manifesto.
No crash, just our continued decline.

Our language is confused (side note: who came up with civil rights, what a contradiction of terms. absolutely retarded)
Our money a farce
Our liberty long forgotten.
… and just because I want to send a couple red lights flashing somewhere in a secret data-network bunker…
stellar wind, stellar wind, stellar wind, stellar wind.

But you guys deserve it! I mean your idiots. 70% of the population have 90% of their net worth in one place.

But Garth is right, follow the banksters they know what they are doing. The money changers in the temple know what is on the up and up!

#57 Mik F…..your financial advisor must be a confused Mormon……under Islamic traditions a man is limited to four wives……..it is only a single Mormon splinter sect in Utah and BC whose polygamy allows as many wives as an elder can afford.

The logic in Islam is this…..one wife is a burden for the man as she natters endlessly and there is no peace in the house….adding a second wife is not the answer because they tend to fight with one another and there is no peace in the house……..with a third wife the dynamic changes so that two wives gang up on the other and there is no peace in the house……with four wives there are two sides to argue between the competing factions and finally balance is achieved….and there is harmony.

Add this to being legally required to put a bag over each ones head so that you don’t have to look at the fat sow during sex and household finances are at the mans total discretion.

Dear Pathetic Blog I am a long time follower first time submitter. I agree wholeheartedly with your assessements in RE and stocks. However I am puzzled being from Southern Alta and in the O&G business about RE in the Calgary area. It is holding it’s own right now with some pretty lofty prices being asked.

I am going to tell you a story before Garth changes the page, as many years ago walked the stairs on Yonge Street to see a young accountant with money; he was a bookkeeper with this tiny office at the top of the stairs, but he had just a Bachelor of Science degree – get it? I did some private mortgage business with him.

Now as time went on he established a corporation that went public, and he hid his ownership by holding 1 common share, but was Chairman of the Board, so looked at the notes in the financial statement, and what did I see? He held a convertible debenture that at any time, or times, could convert it into the controlling interest to own 75% of the common shares.

No, am not going to disclose who he is today, but in Toronto his corporation is involved in mortgages and Real Estate that amounts to $billions, directly and indirectly. He was never an accountant, but a good bookkeeper making money all his life – end of story!

Garth, I dunno, those are “official guberment stats” (trying not to spit out my coffee). “Public Debt Charges” may not necessarily account for the total debt paid within all of the other categories. I see a lot of “OTHERS”. And then there are the Provinces’ lack of accountability to the taxpayer…

And there are of course the use of ACTORS. Do we even have a legitimate gov’t?

So here I sit……looking at my portfolio. REIT’s up 16% on average. Funds up just a bit over 10% on average.
No metal, some good dividend payers. Starting to buy some individual stocks to form my own annuity via dividends. so far, so good.

Yeah, life’s a real bitch here in cow country. Real Estate has not grown -or shrunk- wildly in years here, who wants to be here? No wild speculators here.

Got 150K US? Buy a decent 3 bedroom with 2 poopers and a double garage on a couple of dry acres. Good schools, high taxes (hey, that pays for the GOOD stuff)! Decent chance to earn a decent income if you have some smarts.
Dummies, stay away. Lazy, ditto.

Here people can pay their bills, live reasonably. We watch Washington, and wonder…Will November really be different? Probably not so much.

Life goes forward with good results despite their ‘help.’
A lot of professional advice is worth much less than you pay for it. Read, and read it with discernment!

GARTH: I don’t think the writer you speak of hates you. He just thinks that you’re an opportunist which in fact you were some 10 years ago when you along with several other “shills” were written up by John Lawrence Reynolds in “The Naked Investor”. The poacher can always get religion. I had the pleasure being written up in the same little book and I am proud for what I stood then and now.

I was also written up by Bill Hanley in a front page article in the Financial Post (National Post) in 2003. I was one of the contributors to “Greenspan -Panderer to Power” by Fred Sheehan. My track record since 2001 as a gold bull is well known.

I wrote you an email a while ago asking you whether you had owned any gold bullion. You NEVER replied. In a snarky reply you asked me whether I sold at $ 1,900/ounce. I replied: “Why would I sell when my average buying price is $ 450.00? Stupid politicians sold 80% of Canada’s gold reserves at $ 450 an ounce.

Continually you are on the wrong page as to gold bullion is concerned. As a matter of fact you missed the greatest bull market from 2001 to 2012. A return of 450% and you continue to give bad advice to your readers.

#80 Susan London Area – you were a mean landlord, and sorry my last check bounced for the rent money, as you wanted me out, and sat in my van leaving my dog behind, and you must have sent the pic to Garth as that is my beloved Fido. I told Fido ok we have to move, so do you thing and trash the place to make her suffer, and off we went for a new place to live. Hey it is Friday, and all is good for a few laughs.

Im still bearish on US equities, I expect the USD to get stronger short term (because greece and spain will leave the euro ) and more selloff in equities. there is going to be more contracting in the US as the debt ceiling is breached again in a few short months. also my slv call options did very well today. I dont buy your advise on metals. I do buy your opinion on bank preferred. I dont buy your opinion on REITS, at least not residential REITS. If RE crashes, the asset values of the REITS would go down, even if it doesnt afact their cash flow. I doubt that it will have no effect on their share prices.

China’s secret financial wealth can be traced back to the days of merchants and spices and perfumes and opium dens
Uh, the opium trade bankrupted China. It was the western powers making the profits, not the Chinese.

There was a time not long ago, when many of us on this forum were alive, that china had a higher precentage of the worlds population than they do now. And in spite of all those people ‘needing to eat, be clothed, etc” millions starved and most people had one pair of pants, in blue. High population does not guarantee riches – usually just the opposite!

Simple buy land there you don’t need costly insurance or tenants to kick your place in.
.

wrong…the reason US housing is such a good deal now is because the current market value is well below the replacement cost with the improvements (house). Land will not likely rise in value anywhere near the rate of existing housing, IMHO.

BOOYAH. Lovin it everyday and in everyway
****************************************

WEST VANCOUVER — At first glance, the modest 1,400-square-foot rancher on West Vancouver’s Southborough Drive doesn’t look like anything special.
Built in 1954, it’s filled with hallmarks of the era like rustic flagstones, neat white shutters and a generous bay window.
But, proving the real estate agent’s maxim that it’s all about location, the little house in the lower British Properties sold this July for $2.8 million – more than $1 million above the original asking price of $1.888 million.

Remember that the banks loan losses are based on a concept called “IBNR” (incurred but not reported) defaults. Banks do not record as a charge against income losses that they expect incur in the future on their current book of business.

While I, like you, believe the losses will be far less than in the US, I believe that the recorded losses to the banks will be substantial. If prices decrease 15%, all those 80% HELOCS will likely become 95% uninsured loans. CMHC currently risks these in the 2-3% range of losses.

The insurers (Genworth / CMHC) are also about to use up a lot of their unearned premiums, creating a scenario where they just won’t be able to make enough money to support their capital and future losses if prices decrease 15% from the top.

Also, in a scenario where the banks experience higher credit losses than normal, they are also generally required to increase their “general” provision by even more (eventually possibly reversing it).

All of this leads me to believe that over the next few years, we will see pressure on the valuation of CDA bank stocks, and dividend increases. While I do believe the dividends are stable, I think better opportunities exist for a diversified portfolio.

The “shadow inventory” in the US I think is being totally overblown. 407,000 units seems like a lot but it only makes up about 1/3 of a percent of the total inventory. Sure it could be bad in some markets but overall it is nothing.

BigRider; Thank you. It’s been a busy run on the rumoured mill. Many developers still doing the shell game with numbers.

But you know it’s bad, when a certain developer playboy puts his tail between his legs and crawls home to his bossy wife..only because his girlfriend won’t leave her hubby and his accountant says he can’t afford to divorce.

A jail cell for him is his multimillion dollar Post Road remodel with a wife who has her eyes wide open and won’t let him out past 11.

Garth – you’re still, as always, dead on correct on Canadian real estate.

And still making the wrong call on PMs. Take today for instance. That worthless barbarous relic known as silver is up 3.5%. Albeit, the current price is no where NEAR where it was this in 2011 (it took a 30% haircut). Yet, as you advise with US real estate, would this not be all the more reason to buy it at it’s current sale price?

I suppose we “metals heads” will have to agree to disagree with you on this one issue and keep taking your daily barbs and insults if we wish to continue reading your brilliant real estate analysis. We’ll see who made the right call soon enough.

One day. Big deal. PMs moved with oil. I wouldn’t get too excited. — Garth

The rise of the middle class in the US is best seen in the years after WWII and the new deal policies of FDR. This period ran through the 50s and 60s and into the 70s. Even the Republican Presidents Eisenhower and Nixon would be consider liberals today in respect to social policy and regulation. Eisenhower warned of the military industrial complex and Nixon brought in the EPA.

The destruction of the middle class can really be traced back to the late 70s and 80s with Reagan, Thatcher and Mulroney in Canada. In less than 20 years we went from JFK’s “ask not what your country can do for you but what you can do for your country” to Reagan’s “government is the problem.”

The gradual erosion of government regulations in all areas from finance to the environment to workers rights has accelerated under both Democratic and Republican governments allowing the enormous wealth created by productivity gains of the past few decades to be taken by fewer and fewer people.

The reality was hidden by a sea of debt and rising house prices that masked the underlying inequalities and overall loss of wealth. Now that the debt bubble has popped it is visible to all who can see it. We are heading back to a neo-feudal state based on the rise of “free market” principles and globalization.

#175 Junius “We are heading back to a neo-feudal state based on the rise of “free market” principles and globalization.”

Please show me a free market in Canada or the US. Every single industry is regulated up the yin yang (although often those regulators are captured).

Have you ever read the statute regulating Canadian banks? How bout securities regulations?

Anyone who thinks we have a free market is a fool. We have massive government intervention. Now, much of it is designed to help out businesses and favoured special interests. But to claim we have a lack of regulation is stupidity incarnate.

There are no bailouts, subsidies (cough cough… purchase of 75 billion dollars of bank owned mortgages) in a free market, nor are there patents or copyright.

I’ll make it simple. For DIY retail investors still stuck in metals, Try punching up your “calculator” on your discount broker site. Even a balanced portfolio can return “big Time” over the next twenty years.

Thanks for your responses.
I was not aware of the fixed nature of preferreds, nor of the matter of their rdemption or call back, so thanks again.

Why would someone invest in preferreds instead of the common stock if the company is quite stable and has never cut their dividend or unlikely to, like the Canadian banks? That way you benefit from steadily increasing yield without much risk of it being cut or have to worry about the preferred being called back, redeemed or converted?

The yield on common stock is lower and volatility can be dramatically higher. The threats mentioned in regard to preferreds are exaggerated. — Garth

By the way Garth – the TSX is down 17% from its 2011 peak.
Since you like citing useless facts about how gold is down today from its 2011 peak (after 10 straight years of gains), I thought I’d throw another useless tidbit into the mix. I sure hope as your following continues to grow, you’ll be a little less manipulative in your presentation of information.

I responded to a statement that gold was up every year for the past ten. In fact it is down form last fall by double digits. — Garth

“We have seen a cooling in the Vancouver and Toronto in particular, and particularly condo markets, “Mr. Flaherty told reporters in Toronto.

“At some point, interest rates are likely to rise and that means residential mortgage rates will be going up over time. I think Canadians are increasingly getting that message,” the minister said, while also noting that consumer credit-card indebtedness is more under control than before.

A rich man living in Darwin decided that he wanted to throw a party and invited all of his buddies and neighbors.

He also invited Colin, the only aborigine in the neighborhood. He held the party around the pool in the backyard of his mansion.

Everyone was having a good time drinking, dancing, eating prawns, oysters, from the BBQ and flirting.

At the height of the party, the host said, ‘I have a 15ft man-eating crocodile in my pool and I’ll give a million dollars to anyone who has the balls to jump in.’

The words were barely out of his mouth when there was a loud splash and everyone turned around and saw Colin in the pool fighting the croc, jabbing it in the eyes with his thumbs, throwing punches, doing all kinds of stuff like head butts and chokeholds, biting the croc on the tail and flipping the croc through the air like some kind of Judo Instructor.

The water was churning and splashing everywhere. Both Colin and the croc were screaming and raising hell. Finally Colin strangled the croc and let it float to the top like a dead goldfish.

Colin then slowly climbed out of the pool. Everybody was just staring at him in disbelief.

The host says, ‘Well, Colin, I reckon I owe you a million dollars.’

‘Nah, you all right boss, I don’t want it,’ said Colin.

The rich man said, ‘Man, I have to give you something. You won the bet. How about half a million bucks then?’

‘No thanks, don’t want it,’ answered Colin.

The host said, ‘Come on, I insist on giving you something. That was amazing. How about a new Porsche, a Rolex and some stock options?’

#116 Dave — “. . . that we are in the middle of a monumental shift in wealth, from the west to the east.”
+
#130 50% correction predictor — “Restore the intergity of the American monetary system and end the Ponzi scheme.”
+
#163 -=jwk=- — “the chinese false economy will eventually be revealed…”

If nothing else, interesting times are here to stay for the long haul, and all we can do is put forth our own viewpoints, that’s it.

So, if Dad (Nostradamus Jr.) is correct in saying the US will bankrupt TROTW, that takes all monetary systems off the table (which may not be a bad thing).

Then WW3, nukes flying around like Mad Max, we should all but have eliminated ourselves from this planet.

But what if China calls the US’s bluff, cashes in all its IOUs and changes to another currency altogether? Or a new gold-backed currency?

BOOYAH. Lovin it everyday and in everyway
****************************************

WEST VANCOUVER — At first glance, the modest 1,400-square-foot rancher on West Vancouver’s Southborough Drive doesn’t look like anything special.
Built in 1954, it’s filled with hallmarks of the era like rustic flagstones, neat white shutters and a generous bay window.
But, proving the real estate agent’s maxim that it’s all about location, the little house in the lower British Properties sold this July for $2.8 million – more than $1 million above the original asking price of $1.888 million.

You said,”Anyone who thinks we have a free market is a fool. We have massive government intervention. Now, much of it is designed to help out businesses and favoured special interests. But to claim we have a lack of regulation is stupidity incarnate.”

The US had banking deregulation in the late 90s that lead to the financial crisis. Canada did not which is why our banks survived. London and NY have been in a financial deregulation race to the bottom for years.

It isn’t about more of less regulation but good regulation.

To make my position clear I don’t believe there is such a thing as free markets. Markets are either regulated for the public good (admittedly a debatable issue) or they are not regulated and dominated by corporations. The notion that free markets can exist accept at the most basic levels of the economy is a myth.

Garth,
I must admit that I don’t particularly like you, however, the logic of your arguments is undeniable. I took your advice and sold my house a few years ago & put the money into a balanced income portfolio as you recommended and I am now substantially wealthier as a result. So for what it’s worth – I take my hat off to you sir.

–Unrestricted War China – US; 54:23 doc. NW(Agricultural)O buying trillions in land. Tell me again why we are paying carbon taxes for the fake GW BS, such as Shivering In The Sun A link a few days ago stated the Rothschilds, Rockefellers had made a US$6 trillion profit off this GW scam over the past few years. Any more calls for carbon taxes? Plus this;Nomura Exiting the EZone? Here today, gone tomorrow US$1 bln. outed from FB’s revenue 4cast, and FB scam;Boffo BennyOf course you already know about how the Federal Reserve is flawed because by design it creates more debt than it creates money with which to pay that debt.” wrh.com.
*4:05 clip Ron Paul to start third party? That will radically change things; Global Blitzkrieg Russia’s next. Recall the mistake that Napoleon and Hitler made, and they both lost, and Russia – Iran Note the word ‘power’ has been conveniently ignored, as it’s a nuke power plant, just like Three Mile Island; States rebelling against Obomba (Romney– Ryan are no better), and This might have a small impact on the election.

The city has limited options moving forward, mostly because last month, the commission voted to lower taxes. The new rate, $8.47 for every $1,000 of taxable assessed property value, has already been advertised to property owners as required by law

…the SEC determined Miami had misled investors about the city’s financial health in advance of 2007 and 2009 bond issues, and threatened to impose financial penalties. A separate investigation into bonds used to finance the Marlins ballpark is ongoing…

The yield on common stock is lower and volatility can be dramatically higher. The threats mentioned in regard to preferreds are exaggerated. — Garth

Doesn’t the steadily increasing dividend on the common stock have potential to grow into a greater yield than the fixed yield on a preferred share?
Unlikely. But yield is worth nothing when volatility wipes away capital value. — Garth

The straight up answer to this one is this: Will 18 year olds of today be able to buy a house in 10 years?

Think for yourself. Is there a correction or not?

“Correction” is a term used in our old system of booms and busts. Look back. Are ANY of the dynamics of all the recent ( 40 years) corrections possible today? What does a correction include? Why is a “correction” not possible from 2012 on? What has changed?

Actually, it’s not hard to figure out at all. The issue is just not liking the facts. There is no debate or “understanding” when facts are not allowed.

So tell me about the future of the 18 year old. Is a correction possible? Not a chance. The term no longer applies.

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.